Credit card limits anger gas buyers
Thursday June 19, 2008
The first time Lindsay Jones couldn't pump more than $75 of gas, she thought the problem was with her.
"I thought there was something wrong with my [credit] card, because it never happened to me before," said Jones of North York as she filled the tank of her 1997 Jeep Grand Cherokee at the Rutter's Farm Store in Newberry Township.
But the problem wasn't with her credit card. MasterCard and Visa users at Rutter's and many gas stations nationwide are limited to $75 at the pump.
Some retailers claim the credit card companies have created an artificial limit. MasterCard and Visa counter that they're trying to protect consumers.
It's an issue for those who drive sport utility vehicles and other large autos. A gallon of regular gas hit a record $4.017 in the midstate this week, according to The Patriot-News weekly survey of area stations, so a 20-gallon fill-up at that price would cost $80.34.
Drivers who want to exceed $75 on a Visa or MasterCard at a capped pump must make two transactions -- each time inserting their card, lifting the nozzle and choosing the grade of gas -- or they can pay the cashier in the store.
Scott Hartman, president of Rutter's Farm Stores, based in York County, blamed MasterCard and Visa for what he called foisting an inconvenience on motorists and merchants.
"It's become a huge issue for the industry as the price of gas is rising," he said.
MasterCard and Visa are making money by forcing two transactions at the pump, he said, because the companies get a base fee and percentage every time a card is used.
MasterCard and Visa say the limit helps prevent fraud at pumps, which can't confirm users' signatures. Merchants and issuing banks are not responsible for up to $75 of fraudulent card use at a pump.
Visa raised the protection level from $50 to $75 in April "to better protect acquirers and merchants from fraud and improve customer convenience."
"It is the merchant's decision to limit purchases at automated fuel dispensers," Visa said in a statement. "Consumers also always have the option of paying by Visa card at the cash register."
"MasterCard has a policy in place to protect consumers and merchants from fraudulent transactions," spokesman Tristan Jordan said. "It protects the gas merchant against certain chargebacks up to $75. If a transaction is fraudulent and the cardholder said they didn't make that purchase, the merchant is not responsible."
MasterCard doesn't force retailers to shut off the pump at $75, "but our policy influences them to do so," Jordan said.
Gas station operators nationwide say higher prices translate into higher credit card fees that they must pay, squeezing profits at the pump.
The operators are upset with the so-called interchange fee -- a percentage of the sale price paid to credit card companies on every transaction. The percentage is fixed, usually at just under 2 percent.
But as gas tops $4 a gallon, fees are edging toward 10 cents a gallon. Stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits shrink or even decline.
"At these prices, people aren't making any money," said Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores. "It's brutal."
Hartman said gas merchants who allow more than $75 on Visa or MasterCard per use run the risk of being denied reimbursement for all of their transactions -- not just those tagged as fraudulent.
He also disputed the notion of chargeback protection. Rutter's pays -- in full -- for thousands of dollars of fraud at the pump every week, he said.
Some local retailers might be reluctant to discuss the issue. Calls or e-mails to Sheetz, Kroger (owner of Turkey Hill stores), and the Pennsylvania Petroleum Marketers and Convenience Store Association were not returned.
Giant Food Stores limit pre-pay pumps to $100 and pay the balance over $75 in case of fraud, public relations director Tracy Pawelski said.
"We are constantly evaluating the pre-pay limit as prices increase," she said. "There is no limit to the amount of gas a customer can purchase if they pay the attendant at the kiosk."
Shipley Energy, which owns 23 Tom's convenience stores in Pennsylvania, has partnered with a new credit card company, Revolution, which charges lesser interchange fees.
Bob Astor, wholesale fuels business manager for Shipley, said those savings are passed on to customers. Customers who pay with the card get a 10-cent discount.
News Source : http://www.pennlive.com/ |
